Companies & Industries

Cloud Computing and Peter Drucker

The management guru had little fascination with the latest technology. That might have changed had he met Florian Ramseger

One of the most amusing photographs I've ever seen of Peter Drucker shows him sitting in front of a boxy Compaq computer. He awkwardly holds a mouse in his right hand, while his left hand stretches stiffly to the keyboard. The quizzical look on his face says, "Get me out of here." None of this is terribly surprising for a man who was so ill at ease on a PC that, while ruminating on how the Web was changing the world at the start of the 21st century, he chose to write the last of his books on a Brother typewriter. As for the computer, Drucker once remarked, "I treat it just like a big adding machine." Beyond his personal discomfort, Drucker worried that managers have a tendency to become overly enamored of the latest gizmo. As a result, they forget that technology is not an end in itself and that for certain decisions—those requiring intuition, for example—humans will always have an advantage over machines. "All a computer can handle are abstractions," Drucker wrote. "And abstractions can be relied on only if they are constantly checked against the concrete." Like Electricity Through the Grid

Still, for all his wariness, even Drucker would have been taken with an essay written by a young economist named Florian Ramseger, who asserts that "we are at the doorstep of a new era" due to the advent of "cloud computing." This is the Internet-based system in which shared resources, software, and information are provided to devices on demand, much the way that electricity moves across the grid. Indeed, as Ramseger sees things, it is an era that Drucker himself helped define. "Cloud computing has the great potential to put in place the three main elements of Drucker's knowledge society," writes Ramseger, 29, a German native who just joined the World Economic Forum in Geneva as a research analyst. His composition on the topic was recently picked as the winner of the Peter Drucker Challenge, a contest that drew more than 200 entries from around the globe; participants could be no older than 35. (The competition was sponsored by the Drucker Society of Austria, an affiliate of the Drucker Institute, which I run.) The first element, according to Ramseger, is enhanced connectivity. This is crucial because in a knowledge society, workers tend to take on highly specialized tasks. But "by itself," Drucker explained in his 1995 book Managing in a Time of Great Change, this "specialized knowledge yields no performance." To produce meaningful results, groups of people boasting different areas of expertise must often come together and contribute to a common goal. Cloud computing promises to make this increasingly easy, Ramseger writes, because it will "create many new platforms of exchange for knowledge workers to engage in." Leverage for Workers

The second element, he says, is a shift in "the balance in employer-employee relations." In his 2002 book Managing in the Next Society, Drucker advised corporations to recognize that they need knowledge workers more than knowledge workers need them. Unlike laborers of the past, Drucker wrote, "they know they can leave" most any time for other opportunities. Ramseger suggests that with cloud computing, this trend toward mobility will only accelerate. "Workers will no longer need to be deskbound," he says. "Instead, by being able to plug into the cloud anytime and anywhere, they will finally be able to own their work tools: a netbook and some server space." The third element, Ramseger writes, is "flatter hierarchies." Drucker believed that knowledge workers respond only to sound objectives, not the whims of their bosses. "They require a performance-oriented organization rather than an authority-oriented organization," he wrote. Cloud computing, Ramseger says, should help further "liberate the workforce" by encouraging "constant coordination" among all sorts of people, with no reference to their corporate rank or social standing. All that matters is the quality of the knowledge. Others see the same trend unfolding. A couple of weeks ago, at the second annual Drucker Forum in Vienna, where Ramseger was honored for his winning essay, the London Business School's Lynda Gratton mused about what the planet might be like in 2020 if, as some predict, 5 billion people are then connected through their handheld devices. "The cloud has huge implications for work," Gratton said, because "anyone anywhere will be able to download anything at a cost that's near nil." Missing the Point

Not everyone is so enthusiastic. Some say the cloud is overhyped, or they dismiss it as a mere fad. Others are focused on security or technical challenges. For his part, Ramseger acknowledges that "there remain many countries with poor Internet infrastructure," which may keep their residents from accessing the cloud. Still others have reduced all discussion of cloud computing to a high-tech horse race, as they handicap which company will emerge as the long-term leader in the field: Amazon (AMZN), Salesforce.com, Google (GOOG), Microsoft (MSFT), or IBM (IBM). Or they characterize it simply as a way to ramp up IT outsourcing and thereby save money. But all of this misses the point. Perhaps more than any technology out there, the cloud stands, in Ramseger's words, to "revolutionize the way we work," if not the way we live. It is a vision so tantalizing, it's hard to imagine that Peter Drucker, if he were still alive today, wouldn't be writing about it himself, mulling the possibilities on his Brother Correctronic.